Key points of investment

Incidents:

The company released its 2024 semi-annual report, with operating income of 5.016 billion yuan, up 17.85% year on year; net profit to mother was 0.389 billion yuan, up 50.68% year on year; net profit after deducting non-return to mother was 0.373 billion yuan, up 46.85% year on year; and net cash flow from operating activities was 0.47 billion yuan, down 10.90% year on year.

Q2's revenue reached a record high in a single quarter. The increase in gross margin stemmed from a combination of factors. The company Q2 achieved revenue of 2.698 billion yuan, a record quarterly revenue high, up 16.37% month-on-month and 19.31% year-on-year; realized net profit without return to mother of 0.204 billion yuan, up 20.32% month-on-month and 25.18% year-on-year.

The company's gross margin for the first half of the year was 23.90%, up 2.32 percentage points year on year; Q2 gross margin for the single quarter was 24.10%, up 2.8 percentage points year on year and 0.45 percentage points month on month. The increase in the company's gross margin stemmed from reducing costs and increasing efficiency of the old business, increasing the profitability of new products, and a slight depreciation of the RMB.

Overseas base layout results are outstanding

The company adheres to the international strategy and has established international production bases mainly in the Pearl River Delta, Yangtze River Delta, Southeast Asia, North America and Europe. The total revenue from the company's overseas bases in Vietnam, India, Mexico and Romania in the first half of the year was 1.011 billion yuan, an increase of 72.65% over the previous year. Overseas base revenue increased to 20.16% of total revenue, and the share of the company's export revenue increased to 31.19%.

The revenue of the four major businesses achieved double-digit growth, and the tool sector, home appliance sector, new energy sector, and industrial control sector of the active hollow cup motor product company all achieved double-digit growth.

In addition, the company deployed hollow cup motor products early. Currently, it is actively confirming needs with domestic humanoid robot customers, completing prototype production, delivering samples of some heads, and actively expanding market opportunities in the fields of humanoid robots and low-altitude economy.

Profits grew steadily, giving it a “buy” rating

In view of the recovery in the industry boom in the first half of the year, we expect the company's revenue for 2024-2026 to be 10.635/12.73/15.372 billion yuan, with year-on-year growth rates of 18.26%/19.70%/20.76% respectively; net profit to mother of 0.727/0.953/1.219 billion yuan, respectively, with year-on-year growth rates of 41.12%/31.00%/27.88%; EPS 0.058/0.076/0.098 billion respectively . In view of the fact that the intelligent controller industry still has great opportunities for development in the future, the company is the leader in the industry and has been given a “buy” rating.

Risk warning: risk of exchange rate fluctuations; risk of product development falling short of expectations; risk of trade friction.